Medicare: A Model Mess

The health debate is now fo cused on the question of a "public option" — with most Democrats insisting that any reform package must include a government-run health-insurance program that would compete with private insurers.

It's a terrible idea. With access to taxpayer dollars, a public option could easily crowd out private competition by selling policies at artificially low prices.

Fans of the idea promise that won't happen, claiming that the government plan would play by the same rules as private plans and would pay hospitals and doctors at almost the same rates as private insurers.

But the history of Medicare shows that this is a promise the government just won't keep. At its inception, Congress assured hospitals, physicians and other caregivers that Medicare would pay all costs associated with providing medical services to beneficiaries.

The government claimed it wouldn't decide which medical costs were justified. In fact, original Medicare law prohibited officials from questioning the appropriateness of health-care outlays.

In the '80s, the government scrapped this system. Officials claimed that hospitals, insensitive to costs, were needlessly driving up public health-care spending. Congress imposed a system to pay hospitals and physicians at rates determined by the government — in layman's terms, price controls.

Medicare's supporters also went to great lengths, at the program's birth, to convince seniors that they'd still have the option of buying private insurance. The Medicare law specifically says it does not "preclude any state from providing, or any individual from purchasing or otherwise securing, protection against the cost of any health services."

So what, some will argue — when so many seniors lacked any health insurance before Medicare? The main "evidence" for that claim is based on a single survey published by the government in 1964 that found that only 54 percent of seniors had health insurance. In fact, that survey excluded many seniors with coverage — such as those covered by private indemnity policies and existing government plans for dependents of military personnel and for the poor.

The distortions and broken promises go on and on. Originally, Congress promised that Medicare wouldn't lead to interference in the doctor-patient relationship by restricting seniors' ability to buy medical services privately. That went out the window in 1997. Now doctors must get out of Medicare entirely for two years before they can accept private-paying patients who are eligible for Medicare.

Yet, despite its monopoly on seniors' health care, the government has been unable to control Medicare's costs. The Medicare trustees recently announced that the program is at least $37.8 trillion in the red over coming decades — and will start running out of money in just eight years.

The claim that Medicare's administrative costs are lower than private plans also is bogus: The government doesn't count all its costs, including collecting premiums and paying for office and staff expenses, and it does little to stop fraud and abuse of the program, which costs at least $60 billion a year. When all costs are considered, Medicare loses its advantage.

Medicare's history shows what's in store under a "public option" for health insurance: Americans will lose their private coverage and come under the government's wing. Costs will continue to soar, and health quality will decline.

The government's sorry track record with Medicare just doesn't justify a multitrillion-dollar public plan.

Grace-Marie Turner is president of the Galen Institute, a nonprofit research organization focusing on patient-centered solutions to health reform.

Medicare: A Model Mess

The health debate is now fo cused on the question of a "public option" — with most Democrats insisting that any reform package must include a government-run health-insurance program that would compete with private insurers.

It's a terrible idea. With access to taxpayer dollars, a public option could easily crowd out private competition by selling policies at artificially low prices.

Fans of the idea promise that won't happen, claiming that the government plan would play by the same rules as private plans and would pay hospitals and doctors at almost the same rates as private insurers.

But the history of Medicare shows that this is a promise the government just won't keep. At its inception, Congress assured hospitals, physicians and other caregivers that Medicare would pay all costs associated with providing medical services to beneficiaries.

The government claimed it wouldn't decide which medical costs were justified. In fact, original Medicare law prohibited officials from questioning the appropriateness of health-care outlays.

In the '80s, the government scrapped this system. Officials claimed that hospitals, insensitive to costs, were needlessly driving up public health-care spending. Congress imposed a system to pay hospitals and physicians at rates determined by the government — in layman's terms, price controls.

Medicare's supporters also went to great lengths, at the program's birth, to convince seniors that they'd still have the option of buying private insurance. The Medicare law specifically says it does not "preclude any state from providing, or any individual from purchasing or otherwise securing, protection against the cost of any health services."

So what, some will argue — when so many seniors lacked any health insurance before Medicare? The main "evidence" for that claim is based on a single survey published by the government in 1964 that found that only 54 percent of seniors had health insurance. In fact, that survey excluded many seniors with coverage — such as those covered by private indemnity policies and existing government plans for dependents of military personnel and for the poor.

The distortions and broken promises go on and on. Originally, Congress promised that Medicare wouldn't lead to interference in the doctor-patient relationship by restricting seniors' ability to buy medical services privately. That went out the window in 1997. Now doctors must get out of Medicare entirely for two years before they can accept private-paying patients who are eligible for Medicare.

Yet, despite its monopoly on seniors' health care, the government has been unable to control Medicare's costs. The Medicare trustees recently announced that the program is at least $37.8 trillion in the red over coming decades — and will start running out of money in just eight years.

The claim that Medicare's administrative costs are lower than private plans also is bogus: The government doesn't count all its costs, including collecting premiums and paying for office and staff expenses, and it does little to stop fraud and abuse of the program, which costs at least $60 billion a year. When all costs are considered, Medicare loses its advantage.

Medicare's history shows what's in store under a "public option" for health insurance: Americans will lose their private coverage and come under the government's wing. Costs will continue to soar, and health quality will decline.

The government's sorry track record with Medicare just doesn't justify a multitrillion-dollar public plan.

Grace-Marie Turner is president of the Galen Institute, a nonprofit research organization focusing on patient-centered solutions to health reform.